Collins v. U.S.

• Decision Date: 01 May 2009
• Docket Number: No. 08-1334.,08-1334.
• Citation: 564 F.3d 833
• Parties: Christine B. COLLINS, et al., Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

564 F.3d 833

Christine B. COLLINS, et al., Plaintiffs-Appellants, v. UNITED STATES of America, Defendant-Appellee.

No. 08-1334.

United States Court of Appeals, Seventh Circuit.

Argued September 19, 2008.

Decided May 1, 2009.

Troy J. Seibert, Zelle, Hofmann, Voelbel, Mason & Gette, Minneapolis, MN, Michael K. Demetrio, Attorney, Corboy & Demetrio, Robert A. Clifford, Attorney, Colin H. Dunn, Attorney (argued), Clifford Law Offices, Daniel T. Madigan, Attorney, Motherway, Glenn & Napleton, Chicago, IL, for Plaintiffs-Appellants.

Steven J. Riegel, Attorney (argued), Department of Justice, Washington, DC, Brandt R. Madsen, Attorney, Madsen, Farkas & Powen, Chicago, IL, for Defendant-Appellee.

Before POSNER, RIPPLE, and EVANS, Circuit Judges.

POSNER, Circuit Judge.

In 2000, two small planes collided while approaching the Waukegan Regional Airport, which is near Lake Michigan north of Chicago, and crashed into a medical center. The planes' occupants — the pilot and passenger of one, the student pilot of the other — were killed, and the medical center was damaged. When the collision occurred, one plane was approaching the airport, intending to land, and the other plane, the one piloted by the student pilot, was practicing takeoffs and landings and also intending to land. The airport's control tower had no radar, so that in clearing planes to take off or land the air traffic controller on duty in the tower had to rely on what he could see from the tower and on what the pilots told him by radio were their positions. The controller was employed by Midwest Air Traffic Control Services, a contractor hired by the Federal Aviation Administration to provide air traffic control at the Waukegan airport. The collision occurred because he could not see either plane and the pilot of the first plane misreported his position, leading the controller to believe that the planes were at a safe distance from each other; and so he cleared them to land. A contributing factor was that one plane was flying slightly higher than the other, and the wings of the higher plane were below the plane's fuselage and the wings of the lower plane above its fuselage, so that the pilots could not see each other. Glare from the sun, and ground clutter (the complex pattern formed by buildings and other features of the ground, which makes it difficult for a pilot, looking down, to see a plane flying beneath him), were other contributing factors.

A flurry of suits arising from the accident were brought in both state and federal court. All eventually were settled except the one before us, which was brought against the United States under the Federal Tort Claims Act by the representatives of the three persons who were killed. The district judge, after a bench trial, entered judgment for the United States.

The Act grants the federal courts jurisdiction over suits for damages against the United States "for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." 28 U.S.C. § 1346(b)(1). (That place, in this case, is Illinois.) An employee of the government includes "employees of any federal agency," such as the Federal Aviation Administration, but excludes "any contractor with the United States." § 2671. Midwest Air Traffic Control Services is a contractor, and the district judge ruled that although the FAA exercises close supervision over the companies to which it contracts out air traffic control, the supervision is not close enough to render controllers employed by those companies employees of the United States. So though he found that the air traffic controller on duty the day of the accident had been negligent in clearing the planes to land when he could not see them, the judge refused to impute that negligence to the United States.

The plaintiffs also contended that the FAA had been negligent in failing to install radar at the Waukegan airport. But this ground of liability, the judge ruled, was blocked because the act "shall not apply to any claim ... based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the party of a federal agency ... whether or not the discretion involved be abused." 28 U.S.C. § 2680(a).

Before we can consider the merits of the appeal, we must address the government's contention that the district court lost subject-matter jurisdiction over the case when on the eve of trial Midwest settled the plaintiffs' claims against it. Under Illinois law, a principal whose liability is based on the doctrine of respondeat superior, which is Midwest's situation, cannot be sued if the agent whose negligence is imputed to the principal by that doctrine — in this case the air traffic controller who was on duty when the collision occurred — settles with the plaintiff. Gilbert v. Sycamore Municipal Hospital, 156 Ill.2d 511, 190 Ill.Dec. 758, 622 N.E.2d 788, 797 (1993); Doe v. City of Chicago, 360 F.3d 667, 673 (7th Cir.2004) (Illinois law); J & J Timber Co. v. Broome, 932 So.2d 1, 7-8 (Miss.2006); Restatement (Third) of Torts: Apportionment of Liability § 16, comment d and illustration 2 (2000); contra, Harris v. Miller, 335 N.C. 379, 438 S.E.2d 731, 741-42 (1994). The reason is that the principal in such a case has a common law right to be indemnified by his agent. Washington Gaslight Co. v. District of Columbia, 161 U.S. 316, 328, 16 S.Ct. 564, 40 L.Ed. 712 (1896); Steele v Hartford Fire Ins. Co., 788 F.2d 441, 446 (7th Cir.1986); Stawasz v. Aetna Ins. Co., 99 Ill.App.2d 181, 240 N.E.2d 702, 703-04 (1968). That right arose as an exception to the traditional common law rule rejecting contribution among joint tortfeasors — that if the plaintiff sued and obtained a judgment against just one of the joint tortfeasors, that one could not sue to force the others to help pay the judgment. Northwest Airlines v. Transport Workers Union, 451 U.S. 77, 86, 101 S.Ct. 1571, 67 L.Ed.2d 750 (1981); Donovan v. Robbins, 752 F.2d 1170, 1178-79 (7th Cir.1985); Dan B. Dobbs, The Law of Torts § 386, pp. 1078-80 (2000). The traditional rule has been abrogated in most jurisdictions in favor of contribution, but indemnity retains significance because it shifts the entire loss to the tortfeasor held to have a duty to indemnify, rather than sharing out the loss among the tortfeasors.

The reason for this shifting, in the case in which an employer's liability is based on the doctrine of respondeat superior, is that the employee is in a better position than his employer to avoid inflicting the injury that incited the suit against the employer. Allowing the employer to shift the full financial responsibility for the employee's negligence to the employee increases the latter's incentive to take care, and his care is crucial because if he takes due care, an accident will be averted that the employer might not have been able to avert.

But the right of indemnity makes a settlement by the employee with the tort plaintiff illusory if the employer remains liable to the plaintiff. Midwest settled with the plaintiffs for less than a million dollars. The plaintiffs' aggregate injury was much greater, which is why they are suing the United States despite the settlement with Midwest. If (a big if, as we're about to see), Midwest is deemed the "employee" of the United States, then, were it not for the rule that extinguishes the principal's liability when the agent settles, Midwest would be faced with the prospect of a suit for indemnity by the United States should the plaintiffs obtain damages in their tort claims suit. If the suit succeeded, Midwest would have gained nothing from settling with the plaintiffs.

The parties to the settlement with Midwest seem to have been aware of the rule that a settlement with the agent discharges the principal, because they stated in the settlement agreement that the agreement was not a settlement. But it was, because in exchange for a payment by Midwest the plaintiffs relinquished their claim against Midwest. That's what a settlement is, regardless of what the parties call it. But the rule discharging the principal has no proper application here because the government, when it is held liable under the Federal Tort Claims Act, has no right of indemnity from its negligent employee. United States v. Gilman, 347 U.S. 507, 508-10, 74 S.Ct. 695, 98 L.Ed. 898 (1954); Gregory C. Sisk, Litigation with the Federal Government § 3.04(e), pp. 122-23 (4th ed.2006); see also Munson v. United States, 13 Ohio Misc. 243, 380 F.2d 976, 978 (6th Cir.1967); Restatement (Second) of Torts § 895D, comment j (1979). Indeed, because the Westfall Act, 28 U.S.C. § 2679(b)(1), forbids bringing a suit against a federal employee for committing a "negligent or wrongful act or omission ... while acting within the scope of his office or employment," the government has made itself exclusively liable for such torts, and by doing so, it can be argued, has determined that the employee should bear no liability himself, including the indirect liability that the doctrine of indemnity would create. See Sisk, supra, at 123.

Granted, Midwest, the settling party, was not an employee of the United States, even if the errant air traffic controller is deemed to have been one. But the government would have no right of indemnity (unless as a matter of contract, which has not been suggested) against Midwest even if Midwest were deemed an employee of the United States. For remember that the right to be indemnified is based on the difference between direct and vicarious liability — the liability of a person who commits a tortious act versus the liability of his employer just by virtue of being his employer. Midwest's...